By Ray Birch
PALM COAST, Fla.—Few issues in the last six months have gotten as much attention in financial services as overdraft policies and fees. It’s to the point where it’s difficult to follow everything that is going on in a rapidly changing market. CUToday.info is here to help.
Credit unions have found themselves facing myriad questions, ranging from fairness of pricing, to whether fees should be lowered to head off any new regulation or laws, to whether members benefit, to subscription models to whether the fees should be charged at all.
The answers are in large part dependent upon the asset size of the credit unions. For many small and midsize CUs the dilemma is particularly acute: they can’t afford the loss of fee income.
One expert has even suggested the move to eliminate overdraft charges will speed up the pace of small CUs merging out. Another forecasts that half of all credit unions might close.
CUToday.info has been closely covering the topic of overdrafts since Ally Bank in June 2021 became the first financial institution to eliminate the fee, and has since been followed by a number of other banks and credit unions.
To help readers remain abreast of all that is taking place, below are stories from the last six months of CUToday.info’s extensive overdraft coverage:
'One Of The Biggest Concerns' Facing The Movement
EDWARDSVILLE, Ill.—Is the growing trend by some large banks and larger credit unions to reduce or even eliminate their nonsufficient funds fees creating a dilemma for smaller CUs? One credit union CEO told CUToday.info the issue is “one of the biggest concerns facing the credit union movement in many years.”
One Forecast: 'Half of CUs Could Close'
LAKE FOREST, Ill.—A new study predicts that if the federal government steps in to control overdrafts many consumers will leave the traditional banking market, nearly half of credit unions will go out of business, and thousands of FI employees will lose their jobs.
OAK HARBOR, Ohio—Should the CFPB issue some strong rules around overdrafts or require many institutions to dramatically lower their fees, a large number of small credit unions will be forced to seek a merger partner, says the leader of one small CU.
BURLINGAME, Calif.—Is it time credit unions go back to a subscription-based checking model? One CEO of a small credit union suggests all of the focus on overdraft policies is reviving that thinking within the CU community.
Death Of Free Checking At CUs?
BROOKFIELD, Wis.—Credit unions don’t want to be the “last man standing” when it comes to charging overdraft fees, and to avoid that fate means the death of free checking at cooperatives, according to one analyst.
How 1 CU Has Responded to Changing OD Market
PHILADELPHIA—It’s time all credit unions revisit their overdraft programs to see if adjustments need to be made, but it’s certainly not time to overreact to “big bank headlines,” according to one credit union CEO.
MADISON, Wis.—The biggest risk credit unions face from the changes taking place in the overdraft market is members’ and consumers’ views of their pricing and how that will affect the “future relevance” of their organizations, according to several experts, including two CUs that have changed their pricing.
Trend Puts More Pressure on Smaller CUs
LAKE TAPPS, Wash.—As the number of credit unions eliminating or reducing overdraft fees continues to rise, will the trend also lead to more small credit unions merging out?
Big Move by Big Bank--How Will CUs Respond?
LAKE FOREST, Ill.—The nation’s second-largest bank, the $2.16-trillion Bank of America, announced it has lowered its OD fee to $10 per transaction from $35 in a move one expert believes will be followed by even more financial institutions either dropping or eliminating their overdraft charges.
LAKE FOREST, Ill.—For the first time in 23 years, overdraft limits are finally moving higher, according to a new study that shows credit unions are leading the way with the increases—including one CU with a $10,000 OD ceiling.
Credit Unions Have Been First to Cut Fees
LAKE FOREST, Ill.—As credit unions stress to Washington that fairly priced overdrafts are needed by members, one person is questioning whether CUs have made it clear they have been steadily dropping their fees over the last 15 years.
Wells Fargo Joins Other Big Banks in Cutting Overdraft Fee
NEW YORK–Wells Fargo has joined Bank of America in becoming the latest to announce it will significantly reduce its overdraft fee.
Citibank Becomes First of the Big Banks to Completely Eliminate Overdraft Fees
NEW YORK—Another big bank is saying goodbye to overdraft fees.
Following the move by Bank of America and others to eliminate or reduce OD charges, Citigroup says it is following suit, making it the biggest U.S. bank make the change.
Sound Too Good to be True? CEO Says Yes
CHARLESTOWN, W.V.—Are the big banks acting like “used car salesmen” when it comes to cutting overdraft fees?
WEOKIE Credit Union Latest to Announce Big Reduction in Overdraft Fee
OKLAHOMA CITY, Okla.––WEOKIE Credit Union has become the latest to announce a significant reduction in its overdraft fee. ... WEOKIE Credit Union Latest to Announce Big Reduction in Overdraft Fee
'One Of The Biggest Concerns' Facing The Movement
EDWARDSVILLE, Ill.—Is the growing trend by some large banks and larger credit unions to reduce or even eliminate their nonsufficient funds fees creating a dilemma for smaller CUs?
UW Credit Union Reduces Overdraft Fee to $5
MADISON, Wis.– UW Credit Union said it has now cut its overdraft and nonsufficient funds fees by more than 80% to just $5 per occurrence, from its prior fee of $30.
PSECU Announces Plan to Remove NSF Fees, Cut Courtesy Pay Fee
HARRISBURG, Penn.–Pennsylvania State Employees Credit Union said that effective March 1 it is removing non-sufficient funds (NSF) fees for all members. In addition, PSECU said its courtesy pay fee ...